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An income statement tracks income and expenses for a small business. Most small businesses use cash accounting systems, so Excel is a great program to track your income and expenses. The cash basis accounting system records a transaction each time you receive or pay cash. So, after you receive or pay cash, you can enter the transaction into Excel, which then will update an income statement that you create. This is useful to quickly track your finances.

1. Type "Income Statement" in cell A1 in an Excel spreadsheet.

2. Type "Gross Receipts" in cell A2.

3. Type the rest of your expenses in column A, giving each expense its own cell.

4. Double-click "Sheet 2" and type "Gross Receipts." In the gross receipts worksheet, type the date and amount of each sales transaction you have. After you type them all in, in an open cell type "=sum(" and then highlight all your cells with sales numbers and press "ENTER." This will add together each transaction.

5. Go to your income statement worksheet and in cell B2 type "=" and then click on the "Gross Receipts" workbook and click the cell that has the summation of your sales amount. Press "Enter." This transfers your total gross receipts from the one worksheet to the gross income worksheet.

6. Create a worksheet for each one of your expenses. Be sure to include dates and expense amounts in the worksheet. Then perform the summation function that you did with gross receipts.

7. Link each expense worksheet to your income statement worksheet. Go to your income statement worksheet and in cell B2 type "=" and then click on your one expense worksheet and click the cell that has the summation of your expense amount. Press "Enter." This transfers your total expense from the one worksheet to the gross income worksheet.

8. Type "=" in the first row that does not have an expense on your income statement worksheet. Click cell B2, then press "-" on your keyboard and click cell B3 and press "-" again. Keep performing this operation until every expense is covered on your income statement. Press "ENTER" when done. This is your net income.

9. Type "Net Income" next to your net income number on the income statement.

About the Author

Carter McBride started writing in 2007 with CMBA's IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard's Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.